International Trade Committee on May 9th, 2022

[Claire Citeau]

It's non-tariff barriers and upholding rules-based trade not only in the region but globally as well, and making sure that, to Dave's point, industry and government proactively connect and communicate so that we can better tackle issues before they become problems.

[Gary Stordy]

I have to add that some of the issues that we're dealing with are more domestic at times, whether it's labour shortages, supply chains, shipping issues or logistics to get from here to wherever we need to go. Once we get past that or choose to ignore it, in country, it does come down to some of the technical services. We do have some very good trade commissioners who help us facilitate trade, but at the same time when they find something that's potentially a problem to trade, that information comes back here to Ottawa to deal with rather than maybe trying to resolve it on the ground in country.

[Fawn Jackson]

I would echo Casey's comment that labour is very serious for our industry. We do talk about it a lot in limiting our ability for growth. Beyond that, of course, are the barriers, but we have to get the door open first of all.

If we look at Thailand with a 50% tariff on beef, that's a barrier there. In Indonesia, on the other hand, they have quite low tariffs, but we don't have a certified halal into that market. It somewhat depends on the market, but nonetheless, we need to be there because the growth is really exciting for our sector.

Thanks for the great question.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Next is Mr. Arya for six minutes please.

[Chandra Arya, Liberal, Nepean, ON]

Thank you, Madam Chair.

Canada's opportunities in Indo-Pacific countries are very important, especially in the light of Global Affairs Canada launching the Indo-Pacific strategy. The pandemic is having a major impact, in my opinion, on globalization and in increased protectionism amongst many countries. Obviously for Canada, trade is important as it accounts for 60% to 65% of our GDP.

We need to diversify, because most of our international trade currently is with the U.S. I think it's almost 70%. There is potential with India, which I think Canada is considering as a high-priority trading partner. This year we formally relaunched the comprehensive economic partnership agreement and we agreed, I think a month ago, to considering entering an agreement meanwhile.

Taiwan is a major partner. I think it's bigger than India in terms of trade. In 2021, Taiwan's trade with Canada was around $10 billion, whereas for India it was $8.9 billion.

Canada and ASEAN, the Association of Southeast Asian Nations—Brunei, Malaysia, Singapore, Vietnam—have signed a CPTPP. Taiwan has applied to join it, and we have already begun exploratory discussions with Taiwan for a foreign investment protection agreement.

ASEAN countries are important for diversification. Currently, ASEAN is the sixth-largest trade partner of Canada. We have launched negotiations with Indonesia. Combined ASEAN economies are too big. In 2020, their GDP was $8.2 trillion with a combined population of about 670 million.

Importantly, a working paper recently published by the C.D. Howe Institute states that an agreement with ASEAN would position Canada to join the regional comprehensive economic partnership of Australia, China, Japan, New Zealand, South Korea and 10 ASEAN countries. This is now the largest regional trade agreement in the world and is likely to be an important framework for the future development of East Asian value chains and production networks. All this tells us we should move forward with the trade agreements with the countries in the Indo-Pacific region as soon as possible.

My question is for Claire Citeau of the Canadian Agri-Food Trade Alliance.

I listened to what you said. I agree with all the suggestions you made on diversifying the non-tariff barriers and advocacy. This pandemic, as mentioned, is affecting globalization. In my view, the protectionism and self-reliance strategy adopted by many countries is going to affect our free trade agreements.

Do you think now or in the near future we will have problems with all the existing trade agreements and the new trade agreements in the areas of countries not abiding with the agreements or increasing the non-tariff barriers?

[Claire Citeau]

Is your question about whether there will be new non-tariff barriers within free trade agreements?

[Chandra Arya, Liberal, Nepean, ON]

That's it exactly.

Going forward, do you foresee problems in the implementation of the trade agreements we have, for example, that a country is not abiding by the rules of the agreement or there are increases in the non-tariff barriers?

[Claire Citeau]

I think this is happening already. This is the case. This has started, and it did so way before COVID. I think COVID only made it worse. The whole war in Ukraine certainly accelerates that move towards regionalization. Hence, it is even more important to have free trade agreements in place and strong rules and disciplines that work.

[Chandra Arya, Liberal, Nepean, ON]

In the interest of time, I have another question for both you and Mr. Trew from the Canadian Centre for Policy Alternatives.

Why do you think Canadian companies are not taking advantage of the many trade agreements we already have? Most Canadian trade is still with the U.S., despite all the trade agreements we have with Europe, and the CPTPP, etc. Why are Canadian companies not moving forward?

[Stuart Trew]

I'm not sure I have a great answer for that.

From what I've seen and read, most of the time it's a question of proximity. Familiarity would be one of the reasons that we do a lot of business with the United States. Beyond that, I don't know.

Given the government statistics, there is some evidence they are taking advantage of CETA as well, right?

[Claire Citeau]

I would echo the response on regional proximity and cultural preferences. If you look at some of our competitors, Australia, the U.S., Brazil, Argentina and the EU are also shipping to some of the markets that we are shipping to.

[Chandra Arya, Liberal, Nepean, ON]

Could you give us a quick answer, Mr. Stordy, if you have any comments.

[Gary Stordy]

Sometimes it's just the cost of accessing that market. The cost doesn't necessarily mean that the rules or requirements for entry are harder or better; it's just that if I have something I can sell for one dollar over here, and it costs me 10¢ to get into here, that's where I'm going to go, versus selling it for one dollar where it costs me 25¢ to get into.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We go now to Mr. Savard-Tremblay for six minutes.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Good afternoon.

I would like to thank all the witnesses for being with us today.

It's nice to see them again in person. It's been a long time since we've seen them in the flesh.

Mr. Trew, you spoke to us a little about investor protection, that is to say the mechanism we call “investor-state,” which has been removed from the new free trade agreement, the CUSMA.

You tell us that it would be discussed in the context of an agreement with Indonesia, potentially also in the context of an agreement with the Indo-Pacific region, and that it would be a bad idea.

How would such a mechanism really be a problem in terms of rights protection and environmental protection?

[Stuart Trew]

Thank you very much for the question.

A couple of years ago, we at the Canadian Centre for Policy Alternatives put out a report. The Canadian experience is that two-thirds of cases, investor-state dispute cases, brought mainly, almost entirely, by U.S. companies were against environmental or resource management policies, whether those involved a decision to phase out cosmetic pesticide use in Quebec, for example, or the Bilcon case in Nova Scotia, in which an environmental assessment process was disputed by a Canadian investor who had some investments in the United States.

This is what we see repeatedly, particularly with Canadian mining companies. They're the most active users of ISDS mechanisms in Canada's existing treaties abroad. They have successfully brought cases, for example, against Colombia, which very recently lost a case related to a mining ban in a very sensitive environmental region of the country, which applied to everybody, but simply because Canada had a treaty, a Canadian company was able to sue for compensation in that case.

It's a very grossly imbalanced system.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

So that's why you're recommending that such a mechanism be excluded from a possible agreement with Indonesia and the Indo-Pacific region.

Let's take the example of the United States. I know we are getting a bit off topic, but it is still interesting to see what happens with other countries.

Given that the investor-state mechanism is not part of the CUSMA, have you seen a before and after to NAFTA?

Have we really discouraged investors, or would you say it hasn't really had an impact?

[Stuart Trew]

Unfortunately, we don't have an “after” just yet, because we have the legacy clause in the new NAFTA. There are still some investor-state cases happening until July 2023, but I haven't seen anything to suggest that investment has decreased or increased since we dropped the mechanism.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

You told us what we should not have, that is, the mechanism in question.

Given what you have seen and studied, can you make a recommendation on what should be in place to strengthen human rights and environmental rights?

[Stuart Trew]

That's a good question. I didn't come prepared to talk about some of the mechanisms that are being considered at the UN, for example, but there is a UN treaty on business and human rights that has been in development for, I think, about 10 years now.

Canada has been a bit on the sidelines there. I think the Canadian government could step into those in a more serious way. That would be one way of adding balance at least. The treaties create responsibilities for governments but no obligations or responsibilities for companies. That's one of the major criticisms we've seen internationally with ISDS. They're trying to reform it at the UNCITRAL Working Group III right now. They're trying to reform it in the OECD. There are all kinds of conversations about what's wrong with it. I think it would be smart for Canada to consider those and take heed of those, and maybe back away from...in these agreements, including ISDS, when there's so much of this backlash, as I've said, against the process.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

In a press release that you published on March 17, you quoted the International Union for Conservation of Nature, according to which: “... the expansion of palm-oil production is affecting at least 193 species classified as ‘threatened’...”

In the case of a possible agreement with this region of the world, are you concerned that the deforestation that this could entail would be in contradiction with Canada's commitments?

[Stuart Trew]

Yes, I do believe that. Greenpeace, which we worked with on that press release, believes that as well.

There are tariffs on palm oil, as far as I understand it, that would come down as part of the negotiations. That would almost certainly result in Canada importing more palm oil from Indonesia. That is a major source, among others, including mining and pulp and paper, of deforestation in Indonesia. I think it would have a direct effect.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We have Mr. Green for six minutes, please.

[Matthew Green, NDP, Hamilton Centre, ON]

Thank you.

I'll pick up on some of those questions, through you, Madam Chair, to Mr. Trew.

For the purpose of this study and for, perhaps, people who are tuning in, I would like to get to know a bit more about your thoughts on the balance that you articulated in the way in which investor-state dispute settlements were ostensibly set up to give primacy to private corporations, as I'm to understand it, by unelected, unaccountable, really unknown jurisdictions of dispute resolution outside of the frameworks of any of our legal frameworks.

Can you share an example, in your opinion, particular to mining, for instance, in the countries that we are studying now where this could be a significant problem?